Wed,
2006-10-11 13:34
Introduction
Although the debate is growing around the point in time when
global oil production starts to decline permanently, for countries or regions
where oil production is null or very low, the amount of oil available for trade
in the market is a much more relevant issue. Such is the case of the European
Union; with oil consumption topping 14.5 Mb/d, only two of its member states
figure in the exporting countries list, and both with marginal numbers. More
than worrying with a Peak Oil date, importing countries should worry on the
future availability of tradable oil.
It is therefore of the highest importance for importing countries
to know in advance the amount of oil available to the market, and from which
countries/regions it may come, in order to prepare correctly for the future.
This assessment uses as data sources the Statistical Review of
World Energy, published yearly by BP, and the monthly newsletter published by
ASPO, where assessments for future oil production are available for more than
40 individual countries. Future oil consumption and production is projected
using static change rates for the period starting in 2006 and finishing in
2020. These rates are determined by current trends and by reserves/future
discovery assessments made by Colin Campbell and published in the ASPO's newsletters.
In this text the word "oil" is used for simplicity as
synonym of liquid hydrocarbons, for the past data on consumption and production
used includes Liquefied Natural Gas (LNG).
Oil Exporters
Oil exporting countries are defined as having in 2005 an oil
production greater than oil consumption, thus resulting in a surplus. Using the
data published by BP on its Statistical Review of World Energy of 2006, the
following countries are identified:
Former Soviet Union (where individual data is available for
Russia, Kazakhstan and Azerbaijan), Norway, Venezuela, Iran, United Arab
Emirates, Kuwait, México, Algeria, Qatar, Canada, Malaysia, Ecuador, Argentina,
Colombia, Denmark, Egypt and United Kingdom.
Due to lack of data for consumption,
Figure 1 shows how these exporting countries rank in the world oil
market.
Figure 1 - Oil producing countries identified for 2005. The
"Others" slot contains all countries producing less than 400 Kb/d.
The statistical review contains historical data from 1965 to
present, which is worth observing:
Figure 2 - Past oil exports from countries where data on
consumption is also available.
The well know energy crisis of the past appear in an interesting
fashion: the major declines in exports come after the events that generated it.
Such might be a sign of a market ruled more from the Demand side than from the
Supply side. That situation is likely to reverse as the peak in world oil
production is approached.
The early 1980s are years of marked difficulties for exporters, on
both wealthy sides of the Atlantic internal production backed off demand (
Future Oil Production
Future oil production is projected applying the decline/growth
rates identified by Colin Campbell to the data published by BP. In most cases
the numbers of each source for daily production do not match, Campbell's assessments
focus on Conventional Oil, while BP's historical data on "All
Liquids" (a somewhat loose definition which includes Liquefied Natural Gas
and other non-specified liquids). Still these differences are usually small,
requiring special treatment only in three cases.
Following is a list of the countries assessed. Next to the country
name is the year of original assessment by Colin Campbell and in quote the
author's view at the time. A brief explanation of the rate used for projection
then follows.
Production stands at 9 Mb/d giving a low depletion rate of 1.9%,,
which itself is reason to doubt the higher official reserve estimates The
country is endeavouring to offset the natural decline
of its aging fields by infill drilling as well as advanced horizontal drilling
to tap the less productive zones in the reservoir. A tar-seal on the eastern
flank of Ghawar, deprives it of a natural water drive, meaning that massive
amounts of water have to be injected. It is also bringing on new much smaller
fields, including offshore extensions. While the country claims to be able to
increase production to 12 Mb/d, it is here thought more likely that it will be
hard pressed to hold present production, which is here modeled to remain about
flat for another twenty years before decline sets in at about 3% a year. It may
not be able even to do that.
Sweet Oil production in
Accordingly, we may expect a second peak around 2010.
It is clear that the reserve estimates of around 50 Gb as reported by the Oil & Gas Journal were far
too low. Exactly how far is difficult to know, but we tentatively favour an figure of about 60 Gb,
still giving a fairly low depletion rate of 3%, which is one argument against
higher estimates.
Production rose steeply up to 2005 and stalled there after; a peak
is still expected circa 2010 at 10 Mb/d.
Insufficient is known about the country to make a very reliable
assessment but the indications are that about 37 Gb have been discovered, of which only 6.6 have been
produced. Future discovery is here assessed at about 8 Gb, giving a rounded total of 45 Gb.
With such substantial reserves, the country has little incentive to explore for
more. If this is approximately correct, it might be reasonable to model
production rising to about 1.4 Mb/d by 2010 followed by a plateau to the onset
of decline around 2030.
This projection is kept without change.
Production is currently running at about 300 kb/d at far below
capacity pending the construction of the new export pipeline when it may
triple. The midpoint of depletion is forecast for around 2015, when production
would decline at about 2.5% a year.
This projection is kept without change.
Oil production commenced in 1971 and has grown steadily to just
over 3 Mb/d. Some 16 Gb have
been produced, which is close to half the total discovered. Peak production was
passed in 2001 (barring any shortlived surge from new
small developments), and will be followed by a relatively high decline of
almost 7% a year.
From 2004 to 2005 the depletion rate for
On this basis, the depletion rate of Regular Conventional
production stands at no more than 2%, suggesting that even the present reserve
assessment may be too generous. It is here assumed that production can be held
at 1.8 Mb/d until around say 2015 before a gentle decline sets in. As already
mentioned, the East Venezuela Basin has substantial reserves of Non-Conventional
heavy oil, lying at depths of between 500 and 1500m.(...) Production commenced
in 1990 and has risen to about 650 000 kb/d. It is assumed here that production
will be flat to 2015 rising thereafter at 3% to peak in 2030 before declining
at 2% a year.
This projection is kept without change.
(...) production could in resource terms rise to a second peak in
2009 at almost 5 Mb/d before commencing its terminal decline at 2.6% a year,
but operational and investment constraints may prevent such a level being
reached in practice, with 3-4 Mb/d peak being perhaps more likely .
Production rose to 4 Mb/d in 2004 and stalled beyond that. Based on the same
resource base this daily production could be maintained up to 2020. Like
Oil production stands at 1.8 Mb/d, and is here assumed to remain
flat at that level to the depletion
midpoint in 2026, declining at about 2% a year
thereafter to about 1 Mb/d by 2050.
Assessment not available for states
other than
This projection is kept without change.
Production now stands at about 3.2 Mb/d, being subject to a fairly
high depletion rate of 5% a year.
Production is currently running at 1 Mb/d, and is expected to rise
to a peak of 1.4 Mb/d by 2006 at the midpoint of depletion, before falling to
about 850 kb/d by 2020 and 300 kb/d by 2050.
Conventional Oil
Production 2004 0.78
Forecast 2010 0.53
Forecast 2020 0.27
The country has been exporting Liquefied Natural Gas for some
time, and has plans to expand the capacity greatly, such that production is
expected to rise to 1.4 Mb/d by 2011, making it the world's largest exporter.
Several gas-to-liquids plants are also being developed by Chevron/Sasol, Exxon, Shell and others, which are expected to yield
1 Mb/d in a few years' time. Petrochemical production, including the world's
largest ammonia-urea plant providing critical synthetic nutrients for
agriculture, is also set to expand.
Productions rises of 9% were experienced in last years, which
should continue up to 2011, beyond that an annual increase of 3.5% is used.
Liquids:
2011 1.93
2020 2.67
[Tar Sands] production, including derivatives, is here estimated
to rise from about 1 Mb/d today to a plateau at 2.6 Mb/d starting in 2020, in a
slow, labour- and capital-intensive process, also
carrying environmental costs.
Production stands at 855 kb/d, which is believed to be the peak,
being set to decline at about 6% a year, which is typical of an offshore
environment. If so, production will have declined to about 570 kb/d in 2010 and
300 kb/d in 2020.
Change rate from 2004 to 2005 was -4.3%; since this was the first
decline year, Colin Campbell's 6% seems quite reasonable.
Production now stands at about 400 kb/d, the capacity of the line.
The depletion peak has been accordingly somewhat delayed by the limits to
export, not being expected until 2004. Production is likely to have fallen to
about 250 kb/d by 2020 and 80 kb/d by 2050.
From 2004 to 2005 production still increased by 1.1%, which indicates a near
term peak. A new projection is made with a decline of 4% to a liquids production
of 290 kb/d by 2020.
Production peaked in 1998 declining to 750 kb/d in 2002. It means
that
Decline rates have been erratic since 1998, with a fall of 7% from 2003 to 2004
being the highest. Henceforth decline is modeled at 6% per year decreasing
production to 290 Kb/d by 2020.
Production, reflecting the two main discovery cycles, reached a
peak of 816 kb/d in 1999 at the midpoint of depletion. It has since declined to
520 kb/d giving a current depletion rate of just under 5% a year.
Projection kept without change.
Indigenous production peaked in 2002 and is set to decline at
about 7% a year.
A final peak was set in 2004 at 390 kb/d, with a decline of 3.3% for the next
year. The 7% figure is here used for it's a common number for offshore terminal
declines.
Production 2002 0.27
Forecast 2010 0.17
Forecast 2020 0.09
Current Depletion Rate 5.9%
The country will become a net importer of oil within about five
years as domestic production continues to fall.
There's a big gap from Colin Campbell's numbers to BP's, almost
500 kb/d; which most likely is LNG. Depletion rate for Liquids is has been
stable around 4%, hence this is the figure used for projection.
Current (2005) oil production of 1.8 Mb/d is set to decline at the
current depletion rate of 7.5% a year, meaning that it will have halved in ten
years.
The days of
Future Oil Consumption
This is an all but easy assessment, and is performed with some
risks. Unlike western importing countries, most of the analyzed countries
experienced profound changes in consumption patterns since the turn of the
century. Future consumption is mainly obtained by projecting the change rates
observed in the last years, especially since 2003 when higher oil prices
started being felt. There is a clear pattern in recent years of growing
affluence in these exporting countries, which are mostly outside the wealthy
importer blocs (Europe, North America,
After a period of slow growth during the years of low oil price,
consumption in
Figure3 - Oil consumption and change rates in
Oil consumption has been steadily growing around 1.5%/year, with
2004 being the exception with 2.6%. The increasing incomes from oil exports do
not seem to affect much the country consumption; the 1.5% figure is kept.
Figure 4 - Oil consumption and change rates in the
Erratic decline/growth through the last years makes projections
difficult. It is likely that the 2005 figure will be maintained for some time
as the country experiences greater affluence as an oil exporter. Future
consumption growth is modeled as slowing down 1% each year from 10% to 5% from
which point it settles.
Figure 5 - Oil consumption and change rates in
After two spectacular declines in 2001 and 2002, the country came
back to life the next three years, going above 10% in 2003 and 2005. Future
growth is modeled has maintained at
10%/year, for
Figure 6 - Oil consumption and change rates in
Rest of FSU
Consumption in the remaining countries is modeled as growing
2%/year.
Consumption history yields years of growth alternating with years
of decline; still the mean since 2001 is positive. Future consumption growth is
modeled at 1.2%/year.
Figure 7 - Oil consumption and change rates for
In the last 5 years 2003 was a clear outlier with a decrease of
almost 20%; without this year the mean growth stands at 8%/year. 2004 can be
argued has a correction year from the previous crisis, but 2001 and 2002 had
similar large numbers, thus 8% is the figure used to project future growth.
Figure 8 - Oil consumption and change rates for
Steady growth since 2000 between 4% and 7% annum with 2001 a clear
outlier. The mean of these figures from 2000 to 2005, barring 2001, is 5.75%
which seems reasonable to project future growth.
Figure 9 - Oil consumption and change rates for
UAE
After a long period of decline, consumption growth came back
strongly in 2001. From 2003 onwards growth rates are settling on the 5-6%
range. The mean of these last 3 years, approximately 5.5%, is thus used.
Figure 10 - Oil consumption and change rates for UAE.
Strong growth in the late nineties was followed by tow years of
stillness; from 2002 onwards growth picked up again with rates varying between
5% and 10% annum. The mean rate of these last 4 years, 8% is used for
projection.
Figure 11 - Oil consumption and change rates for
Since 2000 a trend of erratic slow growth is visible, with 2002 a
clear outlier. The mean of these figures since 2000, and excluding 2002, is
1.75% and looks like a reasonable number for future growth.
Figure 12 - Oil consumption and change rates for
Steady growth in the range of 3% to 6%, with an outlying 11% in
2002. The mean figure since 2000 without 2002, 4%, is thus used for future
growth.
Figure 13 - Oil consumption and change rates for
A nation very hard to model, registering growth rates of 22% for
2001 and 47% for 2002, followed by a 3% decrease in 2003, in turn followed by
strong increases in 2004 and 2005. Oil production in the country will increase
beyond 2020, hence a high growth rate, circa 10%, is quite probable.
Figure 14 - Oil consumption and change rates for
After 4 years of growth with rates above 2%, 2005 comes as the
first year of declining consumption in a long time. The mean figure for the
2001-2004 period is 3.8%, probably a too higher number
for a wealthy country. Still oil production is projected to grow beyond 2020,
making likely future consumption growth, here set at around half of the 2001 -
2004 period.
Figure 15 - Oil consumption and change rates for
Growth years alternate with decline years in a nation already on
terminal production decline. Future consumption is modeled as decreasing
2%/year; still
Figure 16 - Oil consumption and change rates for
After a decline in 2002, growth came back in the following years
staying above 3%. The mean of the last 3 years, approximately 4%, is thus used.
Figure 17 - Oil consumption and change rates for
As for many others not so wealthy exporters, a decline period is
followed by strong growth from 2003 onwards. Future growth is modeled at 5%,
reflecting the last three years.
Figure 18 - Oil consumption and change rates for
The country experienced shy consumption growth in the last 3
years, in spite of high decline rates in production. Future production is
projected as growing 1.5%/year, a number close to the mean of the last 3 years.
Figure 19 - Oil consumption and change rates for
2005 seems to be an exceptional year for the country, the first
where consumption didn't decline since 1996. The good student is projected as
keeping up the good work and declining consumption 3%/year, in line with the
trend observed in the 2000 -2004 period. Such keeps
Figure 20 - Oil consumption and change rates for
A country that illustrates perfectly
the affluence growth in less wealthy oil exporters. After 3 difficult years of decline,
consumption gets back on track toping 8.5% in 2005. The mean of these last 3
years, 5%, is used for 2006; beyond that
Figure 21 - Oil consumption and change rates for
Although experiencing a period of 3 years in a row with
consumption growth above 1%,
Figure 22 - Oil consumption and change rates for the
Future Oil Exports
The final result can be observed in Figure 23, obtained by
subtracting the projected consumption from the projected production for each
country. Once a country stops being an exporter is thereafter left out of the
total. The countries leaving the exporters club are:
Figure 23 - Total Oil exports from the assessed countries,
including the projections for the 2006 - 2020 period.
The graph in Figure 23 depicts a very clear scenario: total
exports from the assessed countries declines from hereafter, never recovering
again. The decline rate grows with time, as seen Figure 24:
Figure 24 - Total Oil exports and evolution rates for the assessed
countries, including the projections for the 2006 - 2020 period.
The declines rates resulting from the projections made are never
higher than those observed during the early 1980s, still in 15 years total oil
exports decline almost 40% from 36.2 Mb/d to 22.6 Mb/d. This period ahead might
not have much in common with the crisis lived in the 1970s and 1980s, but if
economic recession takes over in importing countries, periods of heavy decline
might happen, followed by periods of recovery. It's worth looking closely to
this period in figure 25.
Figure 25 - Decline rates in total oil exports for the assessed
countries during the projected period, 2006 to 2020.
Four different periods can be identified:
. 2006 - 2010 : slow decline below
2%/year;
. 2011 - 2013 : first acceleration to a
decline rate close to 4%/year;
. 2014 - 2016 : steady decline at
4%/year;
. 2017 - 2020 : new acceleration up
5%/year.
The first acceleration is probably the most critical period and
follows the peak in world oil production. The final years of the 2010s decade
will present great challenges for oil importing nations.
Finally is worth mentioning that these four periods seem to fit on
Samsam Bakhtiari's Four
Transitions of which the first started last year.
Important countries left out
There are three main countries for which consumption data is not
available, hence not included in the calculations:
As for
Conclusions
This assessment should be taken "with a grain of salt",
it is not to be expected that the future will follow these projections. But looking at these numbers, there some trends that clearly arise,
the most important being a decline from 2005 onwards of the amount of oil
coming to the market. This situation is a consequence of consumption
growth at higher pace than production in most of oil exporting countries.
Once the amount oil available for export becomes lower than the
amount required by the importing countries costs start to rise, forcing an
abnormal wealth transfer from buyers to sellers. This newly acquired wealth
will improve affluence in exporting countries, which in turn drives up internal
consumption (better automobiles, better and farther from center houses, more
goods imports and transportation, etc). This feedback loop will perpetuate
itself until some event or constraint tackles consumption growth in the
exporters' side, or until the importers collapse from lack of new wealth to
transfer. The former is the most likely scenario.
For oil importing countries like EU these projections bring a
worrisome conclusion: mitigation strategies for oil scarcity should have
started taking effect in 2005. For this to happen, planning should have started
in the late 1980s or early 1990s. Although programs for liquid hydrocarbons
replacement exist in the electric generation sector in the EU, US or
Finally another consequence must be observed: unfortunately, as
laid down originally by Colin Campbell, the Oil Depletion Protocol may only
function if exporting countries restrain their oil consumption. Up to the Peak
Oil epoch the Protocol can work if exporting countries match their consumption
growth to the production, freezing the amount of oil coming on market. After
Peak Oil these countries would have to decrease their internal consumption in
order to mach the decline rate of world production with that of world
consumption. It is hard to envision less wealthy countries reducing their
consumption in order to provide oil to wealthier countries. Let's just hope for
the best.
Acknowledgements
First to the TOD editing team for once
more making possible this sharing of ideas.
Secondly and most importantly to Colin Campbell, for his time long
work on Peak Oil, of which the invaluable country by country assessments, that
made this piece possible, are part of.
http://www.theoildrum.com/story/2006/10/5/215316/408